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OBA says payroll tax proposals are ‘reckless’

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Cole Simons One Bermuda Alliance leader (Photograph by Blaire Simmons)

Cole Simons, the One Bermuda Alliance leader, has branded government proposals to raise payroll tax for high earners and cut it to zero for people on low incomes as “reckless”.

Mr Simons accused David Burt of being anti-business, insisting that such moves would drive away international firms and lead to lower living standards for Bermudians.

The comments come after business leaders warned that the government proposals set-out in the pre-Budget report could damage economic growth and put-off foreign investors.

The proposals would raise payroll tax from 9.5 per cent to 13 per cent for people earning more than $235,000 a year, while payments on the first $48,000 of wages would fall from 1.5 per cent to zero for all workers.

With the February 17 Budget looming, Mr Simons stated that the reforms would be “irresponsible”.

He told The Royal Gazette: “These government proposals are glaringly anti-business, particularly anti-international business and epically unrealistic at a time when we rely on international business more than ever.

“These proposals are reckless and irresponsible and, if enacted, they are doomed to damage the standard of living of all Bermudians.

“It is not responsible because the payroll tax proposals hit international business especially hard, as traditionally, they pay both the employer and employee portions of payroll tax.

“The OBA fully supports making payroll tax progressive with higher earners paying a greater percentage than lower earners.

“We believe that all taxpayers should share in the tax burden to some degree, as all taxpayers reap the underlying benefits from government services. Therefore, we do not agree with the proposal that those earning below a specific amount should have zero tax.

“Lower earners should pay proportionately less, but not zero.

“IB, represented by the Association of Bermuda Insurers and Reinsurers, are especially careful in their public utterances, especially when it comes to public policy and finance.

“Their public statement that government should ‘pause’ is as aggressive a disapproving public statement as you will get from them.

David Burt, Premier and Finance Minister (Photograph by Blaire Simmons)

“If IB is forced to reduce staff, the amount of payroll taxes, customs duties, and TCD fees etc, which government can collect will also decrease, which defeats the entire exercise.”

Mr Simons made a reference to bank robbing as he attacked the proposals put forward by the Premier, who is also the finance minister.

He said: “Bank robber Willie Sutton was once asked why he robbed banks. His answer was ‘because that’s where the money is’.

“It appears that the Minister of Finance is trying his best to emulate Willie Sutton by soaking International business with much higher taxes.

“While the minister is not a bank robber, his job is, at the very least, is to make fiscal decisions to fund the Government without damaging the economy in the process.

“The new tax proposals announced by the Minister of Finance are likely to have a significant negative impact on the economy by solely targeting the international business sector and virtually no one else.

“Factually, international business is the only economic growth engine in Bermuda.

“They already infuse millions of dollars of taxes, corporate spending and spending by their staff.

“So far, we haven’t heard anything from the minister regarding cuts in government spending, yet he is demanding that international business increase its funding of a government whose spending is out of control.

“This is what business means when they say that the PLP’s proposals are not ‘responsible’.”

Mr Simons also criticised proposals to impose a withholding tax on business that outsources certain functions to other countries as “sheer fantasy”.

He said: “What the PLP government may not realise is that in today’s business world, outsourcing is an economic imperative.

“Companies do it to cut costs and remain competitive. If they don’t, or are prevented from doing so by the Government, they become less competitive and lose business, and may end up either closing their businesses or worse, pulling up stakes and leaving the island.”

The comments come after Mr Simons said last month that the OBA would increase taxes for higher earners.

Asked in December if taxes would go up under an OBA administration, Mr Simons told The Royal Gazette: “In some cases, yes. I think it will be progressive, those who have benefited the most will make a contribution.”

For the full statement see under related media

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Published January 27, 2023 at 10:11 am (Updated January 27, 2023 at 10:11 am)

OBA says payroll tax proposals are ‘reckless’

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